Only more complex estates, situations in which you own real estate in many states, or situations in which you have privacy concerns call for living trusts.
Following are four indicators that you do not require a living trust and that creating one would likely be a waste of money. You can consult an attorney to get more help on this.
1. You can transfer your assets without the hassle of a trust.
Most people’s assets typically include their homes, other real estate or mineral holdings, personal property, bank accounts, investments, or retirement accounts.
A straightforward beneficiary designations or a will can effectively handle the disposition of these assets upon death.
2. Probate is not expensive if you have a solid Will and experienced legal representation.
A living trust is frequently marketed to avoid “all the expenses of a probate.” When a Will was correctly drafted to provide for independent administration, the cost of creating funding and related papers will frequently be far higher than the cost of probate. A living trust often costs several thousand dollars to create and fund. Typically, straightforward probate would cost around $1,500.
A living trust can be necessary and an exception to this general rule when real estate or mineral interests are owned in states other than Texas. Probate costs in other states are significantly greater than in Texas. In this case, a living trust that maintains these assets may avoid numerous probates in numerous states.
3. Most people do not now require living trusts for estate tax preparation.
Frequently, living trusts are overvalued as a planning tool for avoiding estate taxes. You do not need a living trust to avoid estate taxes unless your estate is worth more than $12 million per person (the current estate tax exemption)!
The management of what used to be a much simpler estate now only serves to complicate what was once an estate tax saving strategy.
Even if your estate is big enough to justify consideration of estate taxes, you might not necessarily require a living trust to decrease estate tax due. Talk to your attorney about giving and other ways to evade estate taxes.
4. Your assets have been designated as payable-on-death, beneficiary, or joint tenancy with the right of survivorship.
Instead of putting them in a living trust, this is a lot simpler approach to transferring numerous assets upon death.